Econ 102 Exam 2 CH 6

27) An increase in labor productivity shifts the labor ________ curve ________. A) demand; rightward B) supply; leftward C) demand; leftward D) supply; rightward

A

2) If real GDP per person is growing at 4 percent per year, approximately how many years will it take to double? A) 25 B) 17.5 C) 4 D) 8

B

23) An increase in physical capital or a technological advance A) raises the real wage rate. B) decreases demand for labor. C) decreases the quantity of labor employed. D) shifts the production function downward.

A

38) The Industrial Revolution in England in large was the result of A) technological innovations encouraged by the patent system. B) growth in human capital. C) population growth. D) technological innovations that were financed mainly by government spending.

A

4) Which of the following is used to calculate the standard of living? A) real GDP/population B) real GDP/aggregate hours C) ((real GDP in the current year - real GDP in previous year)/real GDP in previous year) × 100 D) the one-third rule

A

44) Which of the following statements regarding human capital is INCORRECT? A) Education is the only vehicle for the creation of human capital because training simply reinforces what has already been learned. B) The accumulation of human capital is the source of both increased productivity and technological advance. C) Writing and mathematics, the most basic of human skills, are crucial elements in economic progress. D) Human capital is the accumulated skill and knowledge of human beings.

A

46) Classical growth theory proposes that real GDP growth is ________ and that real GDP per person will ________ the subsistence level. A) temporary; temporarily be above B) permanent; always be above C) temporary; be above and below D) permanent; temporarily be above

A

10) According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Which of the following is TRUE? A) India's PPF has not shifted since 1997. B) India's PPF has been shifting rightward since 1997. C) India's PPF has been shifting leftward since 1997. D) India has been moving from a point within its PPF to points beyond its PPF.

B

21) Over the past 100 years, real GDP per person in the United States has grown at an average of ________ percent a year. A) 1 B) 2 C) 3 D) 4

B

29) Which of the following is TRUE regarding the real wage rate? The real wage rate I. is always greater than the money wage. II. measures the quantity of goods and services an hour's work can buy. A) only I B) only II C) both I and II D) neither I nor II

B

30) If the price level increases, but workers' money wage rates remain constant,which of the following is TRUE? I. the quantity of labor demanded will increase II. the real wage rate will decrease III. the demand for labor curve shifts rightward A) I only B) I and II C) II and III D) I, II and III

B

31) If the price level rises by 3 percent and workers' money wages increase by 3 percent, then the A) quantity of labor demand will decrease. B) quantity of labor demanded does not change because there is no change in the real wage rate. C) quantity of labor demand will increase. D) Any of the above could occur depending on the magnitude on the dollar increase in the price level versus the dollar increase in the wage rate.

B

32) If the real wage rate is such that the quantity of labor supplied by workers is less than the quantity of labor demanded by firms A) the real wage rate will fall to restore equilibrium. B) there is a shortage of labor. C) the economy is at full employment. D) actual real GDP equals potential GDP because firms make the decision about how many workers to hire.

B

34) Human capital is the A) machinery used by humans to produce GDP. B) skill and knowledge accumulated by humans. C) plant and equipment produced by humans and not by machines. D) technology used by humans to produce GDP.

B

35) Most ________ is embodied in physical capital. A) economic growth B) technological change C) human capital D) labor productivity

B

36) Technological change A) decreases labor productivity. B) increases potential GDP. C) lowers the real wage rate. D) has no effect on employment.

B

37) Labor productivity increases with A) increases in consumption expenditure. B) increases in capital. C) increases in depreciation. D) All of the above answers are correct.

B

39) A worker's stock of knowledge is known as A) financial capital. B) human capital. C) monetary capital. D) physical capital.

B

40) Saving and investment that increase a nation's capital lead to A) slower growth because there is a lack of consumption. B) an increase in labor productivity. C) a decrease in labor productivity as capital is used to replace labor. D) a decrease in the amount of capital per worker.

B

42) An increase in saving that leads to more capital accumulation ________ labor productivity. A) probably changes but in an ambiguous direction B) increases C) decreases D) does not change

B

48) The notion that technological change is not random but instead is driven by the pursuit of profits is an essential element of A) neoclassical growth theory. B) the new growth theory. C) perpetual growth theory. D) classical growth theory.

B

6) Using the Rule of 70, if the country of Huttodom's current growth rate of real GDP per person was 10 percent a year, how long would it take the country's real GDP per person to double? A) 0.7 years B) 7 years C) 10 years D) 20 years

B

1) Suppose real GDP for a country is $13 trillion in 2015, $14 trillion in 2016, $15 trillion in 2017, and $16 trillion in 2018. Over this time period, the real GDP growth rate is A) increasing. B) constant. C) decreasing. D) negative.

C

11) In 2011, Armenia had a real GDP of approximately $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. From 2011 to 2012, Armenia's standard of living ________. A) decreased B) did not change C) increased D) might have increased, decreased, or remained unchanged but more information is needed to determine which

C

12) The historical record for the United States for the past 100 years shows A) economic growth for about half the years and economic decline for the other half. B) growth until 1970 and then a period of constant per person real GDP. C) growth in real GDP per person during most years. D) continuous economic growth, although at different rates, throughout the entire century.

C

15) The gaps between the United States and the Asian countries of Honk Kong, Singapore, Korea and China have been A) there are no gaps between these Asian countries and the United States B) remaining fairly constant C) decreasing D) increasing

C

16) During the 1990s, which of the following experienced the slowest rate of growth in real GDP per person? A) The big 4 nations of Europe B) Canada C) Japan D) United States

C

17) Countries or regions in which real GDP per person has not grown as fast as in the United States since 1960 include A) Japan. B) Canada. C) countries in Africa D) Hong Kong.

C

18) Over the past four decades A) U.S. real GDP per person has fallen below that of the other rich industrial countries. B) the growth rate of real GDP per person in the United States has been increasing. C) U.S. real GDP per person has increased. D) Both answers A and C are correct.

C

20) Between which pair of countries or continents listed below has real GDP per person converged the most since 1960? A) Canada and South America B) United States and Africa C) Canada and Japan D) United States and South America

C

25) Which of the following statements are TRUE regarding the demand for labor? I. The quantity of labor demanded depends on the real wage rate. II. If the money wage rate increases and the price level remains the same, the quantity of labor demanded decreases. A) I only B) II only C) I and II D) neither I nor II

C

26) An increase in a nation's population results in A) a rightward shift in the labor demand curve. B) an upward shift of the nation's production function. C) a movement along the nation's production function. D) a decrease in the full-employment quantity of labor.

C

43) ________ is the knowledge and skill that people have obtained from education and on-the-job training. A) Capital B) Technology C) Human capital D) Labor productivity

C

45) Which of the following is associated with classical growth theory? I. Growth in real GDP can continue indefinitely. II. Technological growth increases as the population grows. III. Population explosions bring real GDP per person back to subsistence levels. A) I B) II C) III D) I and III

C

5) Economic growth is measured by A) changes in nominal GDP. B) changes in the employment rate. C) changes in real GDP. D) All of the above are used to measure economic growth.

C

7) We are interested in long-term growth primarily because it brings A) higher price levels. B) trade wars with our trading partners. C) higher standards of living. D) lower price levels.

C

8) During 2014, the country of Economia had a real GDP of $115 billion and the population was 0.9 billion. In 2013, real GDP was 105 billion and the population was 0.85 billion. In 2014, real GDP per person was A) $135. B) $117. C) $128. D) $124.

C

9) In 2011, Armenia had a real GDP of $4.21 billion and a population of 2.98 million. In 2012, real GDP was $4.59 billion and population was 2.97 million. What was Armenia's economic growth rate from 2011 to 2012? A) 3.8 percent B) 0.38 percent C) 9.0 percent D) 8.3 percent

C

14) The gap between real GDP per person in Africa and real GDP per person in the United States has been A) decreasing. B) there is no gap in real GDP per person between Africa and the United States. C) remaining fairly constant. D) increasing.

D

19) In 2010, of the following which nations had the highest level of real GDP per person? A) Europe Big 4 B) Japan C) China D) Canada

D

22) By measuring ________ we can see that the economies of Hong Kong and Singapore are catching up to the economies of North America but that the economies of Central and South America are not. A) inflation per person B) real GDP C) the population D) real GDP per person

D

28) The demand for labor curve A) shifts rightward when the real wage rate rises. B) is upward sloping and the supply curve of labor is downward sloping. C) is upward sloping because productivity of labor diminishes as more workers are employed. D) is downward sloping because productivity of labor diminishes as more workers are employed.

D

3) According to the Economic Times (09/2012), Standard & Poor's forecast for India's GDP growth rate was cut by 1 percentage point to 5.5 percent as the entire Asia Pacific region feels the pressure of ongoing economic uncertainty. India has averaged 7 percent growth in GDP since 1997. Based on this story, it is most likely that the slowdown reflects a A) change to India's long-term economic growth rate. B) shrinkage of India's economy. C) temporary business cycle expansion. D) temporary business cycle slowdown.

D

41) Labor productivity, real GDP per labor hour, increases if A) there is an increase in the accumulation of human capital. B) new technologies are continuously discovered. C) saving and investment cause an increase in the quantity of capital per worker. D) All of the above answers are correct.

D

47) If the saving rate increases, a country's growth rate of real GDP per hour of labor ________ and capital per hour of labor ________. A) increases; decreases B) decreases; increases C) decreases; decreases D) increases; increases

D

49) The relationship between education and economic growth can best be summarized by saying that A) educated people are less apt to consume goods that deplete economic resources, which encourages economic growth. B) educational expenditures tend to be inflationary, which discourages economic growth. C) educational expenditures tend to divert funds from productive investments, which discourages economic growth. D) education has benefits beyond those who receive the education, which encourages economic growth.

D

A recent article states that "...gains from two centuries of rapid technological innovation are largely exhausted, and new discoveries lack the same revolutionary quality...{Further}, 80 percent of the growth between 1950 and 1993 came from the new application of old ideas, and these old ideas are now mostly wrung dry." (The Economist, 03/03/2011) 50) If this quote is TRUE, what would the neoclassical growth theory predict? A) Economic growth will persist indefinitely because technological change will accelerate again as firms seek profits. B) Economic growth is temporary regardless of technological change and GDP per person returns to subsistence levels. C) Economic growth stops because most technological advances have already been made. D) Economic growth will accelerate because these technological changes are permanent.

C

13) Convergence of the income gap has been most dramatic between A) South America and the United States. B) the Central European countries and the United States. C) Africa and the United States. D) Hong Kong and the United States.

D